Deutsche Bank reshuffles board ahead of AGM

EykHenning

FRANKFURT-- Deutsche Bank AG late Wednesday announced a shuffle of its management board that involves strengthening the position of co-Chief Executive Anshu Jain and the departure of retail chief Rainer Neske ahead of the giant German lender's annual shareholder meeting Thursday.

Mr. Jain will assume responsibility for the bank's strategic development and take care of transforming its operating model to boost efficiency, the lender said in a statement. Mr. Neske will be replaced by Christian Sewing, who assumes his new role in addition to his duties as head of legal. Mr. Sewing became a board member at the bank's last management revamp in October.

Also, two senior executives that were criticized by global authorities for their roles in the manipulation of interbank lending rates will leave the bank.

"I would like to thank Rainer Neske for his 25 years of service to Deutsche Bank," supervisory board Chairman Paul Achleitner said. "Given the new strategic direction we agreed that new leadership would be needed." He added that Mr. Sewing, who began his Deutsche Bank career as a trainee in the retail business, is the right choice to lead the important, core business.

Deutsche Bank also said Stefan Krause, until now finance chief and responsible for orchestrating the recent strategy review, will be responsible for the bank's transaction banking business and the unit that winds down unwanted assets. He also will overlook the disposal of the mass retail unit Postbank, becoming the lender's supervisory board chairman.

The shake-up comes as the bank has underperformed major rivals in terms of profitability and share price over the last three years. Large investors recently urged Mr. Achleitner to reassess his top personnel to turn the bank around. Shareholders also are set to lash out at the bank's co-chiefs, Messrs. Jain and Jürgen Fitschen, at the annual meeting Thursday.

Mr. Achleitner told The Wall Street Journal in an interview last week that he is sensitive to what shareholders think, adding the AGM likely will be controversial.

"Today's management overhaul is a step into the right direction because it shows Mr. Achleitner is willing to act," fund manager Ingo Speich of Union Investment told The Wall Street Journal on Wednesday night. "Mr. Jain gets more power but is also more on the hook for turning the bank around." He added the bank now needs to present more details on the strategy revamp announced in April.

His statements echo those of other large shareholders, who have become impatient with the bank's top management following the strategy presentation and a $2.5 billion fine to settle London interbank offered rate, or Libor, investigations with U.S. and U.K. authorities. Hans-Christopher Hirt of U.K. investor Hermes in a statement earlier Wednesday said, "We urge the bank's supervisory board to review the composition of the management board, taking its performance over the last three years and its new strategy into account."

Deutsche Bank said Alan Cloete, co-head of the Asia Pacific region, and Colin Grassie, head of U.K. operations, would leave Deutsche Bank in the near future. Mr. Cloete, who people familiar with the matter said was close to Mr. Jain, oversaw the bank's Libor submissions at the time of the attempted manipulation.

In a Frankfurt court hearing in 2014, a former Deutsche Bank Libor trader claimed that Mr. Cloete in a 2012 video chat told him that he wanted to "close that box [the traders' inappropriate communication about Libor] without causing a stir." Mr. Cloete denied having made these statements, but the German banking watchdog BaFin privately criticized him for dragging his feet to internally investigate the unfolding Libor scandal at Deutsche Bank.

As part of the Libor settlement with the U.K., Britain's Financial Conduct Authority criticized Deutsche Bank for "repeatedly misleading us." The statement was seen as a slap in the face for Deutsche Bank's U.K. chief, Mr. Grassie.

The bank's involvement in scandals stirred public attention in Germany, with many investors and politicians questioning the progress of the bank's proclaimed cultural change.

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